Oregon Construction Contractors (CCB) Practice Test

What kind of insurance must contractors generally maintain?

1. General business insurance only

2. Liability insurance as a common requirement

3. Only health insurance for employees

4. No insurance is needed if projects are small

The correct answer is: Liability insurance as a common requirement

Liability insurance is a common requirement for contractors because it provides essential protection against claims resulting from accidents, injuries, or damages that occur during the performance of their work. This type of insurance helps safeguard contractors from financial losses that can arise from lawsuits or claims, whether they are related to bodily injury or property damage. Maintaining liability insurance is often a prerequisite for obtaining a contractor's license in many states, including Oregon, as it demonstrates responsibility and a commitment to protecting clients and the public. Additionally, clients may require proof of insurance before hiring a contractor, making this coverage crucial for business operations. While other types of insurance, such as general business insurance or health insurance for employees, may also be important, liability insurance stands out as a primary requirement due to its direct role in addressing the risks associated with construction and contracting work. The assertion that no insurance is needed for small projects is misleading; even minor projects can lead to significant liabilities.